Average Daily Crypto Liquidations Surge Amid High Leverage, Soaring Spot Trading Activity: Glassnode
The average daily amount of capital that is wiped out from the crypto futures market has surged amid overheated leverage and soaring spot exchange activity.
That’s according to a new report from Glassnode and Fasanara, who compared market activity metrics from the current cycle to the prior one.
The latest market cycle mentioned in the report refers to the period from the November 2022 market bottom until now, while the old cycle refers to market behaviour during the 2021 bull market until the 2022 crash.
Daily Crypto Liquidations Soar More Than 200%
In the report, Glassnode and Fasanara said that the average amount that is liquidated in the crypto futures market daily has risen from around $28 million in long positions and $15 million in shorts in the previous cycle to $68 million in long trades and $45 million in shorts this cycle.
The report highlighted the Oct. 10 flash crash, which the researchers called “Early Black Friday.” During this pullback, over $640 million per hour in long positions were liquidated as BTC plummeted from $121K to $102K.
Open interest during the flash crash had also dived 22% in less than 12 hours, falling from $49.5 billion to $38.8 billion. Glassnode subsequently labelled the pullback one of the sharpest deleveraging events in Bitcoin’s history.
BTC has since recovered since it dropped below both the $100K and $90K levels in the weeks following the flash crash. In the past 24 hours, the largest crypto by market cap soared to back above $93K.
Crypto liquidation data (Source: CoinGlass)
The rise in BTC’s price boosted the rest of the crypto market as well. This led to more than $416 million getting wiped out from short positions in the past 24 hours. BTC shorts accounted for the majority of this amount, with $242.62 million wiped out from these trades.
Futures Market And Spot Trading Activity Surges
Along with the uptick in the daily liquidation amount, there has also been a sharp rise in both futures market and spot trading activity.
The report said that open interest in the futures market has climbed to a record $67.9 billion. Meanwhile, trading volumes for futures surged as well, and reached as high as $68.9 billion in daily turnover since the middle of October.
Bitcoin’s spot trading volume has also doubled compared to the previous cycle, with activity soaring into an $8 billion to $22 billion daily range, Glassnode said. There was a substantial spike in spot trading activity during the Oct. 10 crash as well, with hourly spot volume spiking to $7.3 billion.
However, the researchers said that the spike was due to traders trying to buy the dip, and was not the result of them fleeing the market.
Bitcoin Supply Shifting Toward Institutional Hands
Glassnode also said that the crypto market, specifically Bitcoin, is starting to become “more institutionally anchored and structurally mature.”
The researchers added that Bitcoin’s supply is steadily shifting away from retail trading venues and into institutional hands. They said in the report that there is around 6.7 million BTC now held across Bitcoin ETFs (exchange-traded funds), corporate balance sheets, and both centralized and decentralized treasuries.
Since early 2024, ETFs alone have absorbed around 1.5 million BTC, the report added. Meanwhile, balances on centralized exchanges have declined in recent months.
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